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Thursday, October 06, 2016

WHY PHILIPPINE OFW'S GOT THE POWER TO REBUILD ITS ECONOMY THRU FINANCIAL EDUCATION

Only
one in every three people knows how to handle money according to Standard &
Poor’s (S&P’s) Global Financially Literate Survey conducted December of 2015.
That consists only 31% of the total global population who have access to, had gained knowledge from and is practicing financial
literacy.

How long do you need to stay at the left
to be able to do what's on the right?

Manila
Times had elaborated that the survey conducted an interview amongst 150,000
adults from more than 140 countries. The lowest percentage showing the least
financially literate is 13% from Yemen. Sweden and Norway closed the gap
being the first with 71% of their population having an understanding of the
concepts about money. Remarkably in Southeast Asia, Cambodia garners the lowest
percentage with 18%, joined with Vietnam to be lower than the Philippines with
24% and Singapore has the highest rank with 59%.

Philippines accounts 25% only
of its entire population of 102,550,352 (recorded as of Monday, Sept. 12, 2006)
to be the only ones who know inflation, compounding interest (savings and loan)
and proper handling of a credit card. What does this mean?

According
to www.investopedia.com, The Gross Domestic Product (GDP) is one of the primary indicators used
to gauge the health of a country’s economy. It represents the total dollar
value of all goods and services produced over a specific period of time; you
can think of it as the size of the economy. Its calculation could be done
adding altogether the income generated by each working individual of a specific country within the year. This is how society’s contributions come to
play.

Individual
success in handling money depends greatly on how experienced one had become in
using this commodity. With experience being the greatest teacher, financial
education could build a platform as to where all these experiences could be
shared. Experiences don’t consist of achievements all the time. Challenges that
may have occurred could be shared as well to be analyzed to prevent errors to
occur. As it is truly devastating to make a mistake with your hard earned
money, we can all learn from these challenges.

You
may say the rich have a lot of exposure to such scarce form of education but information
was passed from one generation to another only within their family. The survey
also reflected who don’t have access to such education like the women, the poor
and the illiterate. For whatever reason, it’s another story, but I want to
focus on how alarming Philippines’ 25% is since each civilian is a significant
contributor to an economy’s growth.

In the
Philippines, no money topic could be considered an easy one to talk about. Some
feel awkward conversing about it, some feel uncomfortable and others feel
threatened. Needless to say, it speaks a lot about status. The rich people love
to talk about money but the barriers are high for the majority which is the
poor to take it lightly. Money remains taboo and is still surprisingly thought
of as the source of all evil.

Financial
Education says otherwise. It suffices the need for understanding how money
should be treated as a tool. A tool in creating opportunities for a brighter
and secure future ahead while you enjoy the fruits of your labor today. That
the amount of salary is not the only determining factor whether you will be
rich or not but the strategy you learn in sustaining it and making it grow. In
addition, it is imperative to understand a little as to why insurance is
needed, how time can help your money grow and how compounding interest could
benefit you as you save more. And these are just a few of what financial
education can empower you with.

Being
aware of a nation’s potential outcome if its entire population becomes
financially literate is enough reason to increase the number of learned people
as to how to use their money wisely. A world renowned leader Nelson Mandela once
said, “Education is the most powerful weapon you can use to change the world.” In
consideration of the Filipino overseas workers that surround the globe, this
statement of Mandela’s could drive the Philippines into becoming a global
success.

WIKIPEDIA tallied that 13.5% of
Philippines GDP came from Filipino Overseas Foreign Workers’ (OFW’s)
remittances alone. Remarkably, the Philippines, India, China and Mexico are the
largest recipient of official remittances and the Philippines got the largest
in proportion to the domestic economy amongst the 4. If the biggest income generator are the
overseas foreign workers, then the campaign for advocating financial education
should be done aggressively beginning with them.

The
overseas Filipino workers leave their families hoping that working abroad could
make their lives better. To consider a contract abroad, the salary should be
promising enough that it should be a lot more than what they would earn while
working in their own country.

So what happens is that, once they receive their first paycheck abroad, it
usually goes to paying debts in the Philippines that they incurred to arrange
the papers to be able to work abroad. Second paycheck comes, everything will be
sent to the Philippines for the family expecting a breather from the usual
lifestyle. What happens to the OFWs, they have to do another sacrifice of
eating noodles until the third paycheck comes! More likely, the OFW will start
rewarding himself with the third paycheck and this practice becomes endless
until you are pushed to apply for another loan while abroad. The cycle
continues from there… on a larger scale. In the end, with that much number of
years away from the family, you will go home without savings nor any form of
retirement plan.

If
the OFW’s would be taught of and trained on how to save, invest and re-invest
which are the fundamentals of financial literacy, it can improve their way of
looking at saving and spending. They would see the importance of having an
emergency fund which would prevent them from making unnecessary loans. In the
long run, individual efforts will improve the Philippines’ current economy big
time. Individual efforts put together could give the country a competitive
economic disposition.